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Nirmal Bang
DCB (Buy)
CMP: Rs 51.30
Target: Rs 75
Development Credit Bank reported results in line with expectations driven by strong growth in NII (net interest income), higher treasury income and higher profitability. PAT (profit after tax) more than doubled on y-o-y basis and stood at Rs 42.8 crore. However, net profit, excluding one-time treasury gains (Rs 8.5 cr) and one-time operating cost (Rs 1 crore penalty paid for violation of KYC norms) stood at Rs 35 crore reflecting a growth of nearly 85 per cent y-o-y. NIMs (net interest margin) improved y-o-y driven by lower cost of funds and stood at 3.44 per cent in Q1FY14. DCB has emerged as a successful player in a tough environment by focusing on consolidation and steady improvement in most of the parameters. The bank is adequately capitalised and in our view it has all the ingredients in place to lead the growth path.
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